Press Releases

Jun222005

U.S. Congressman Ted Poe has joined a multi-state, bipartisan delegation of almost 90 members of the U.S. House of Representatives as a co-sponsor of H.R. 1898, the Telephone Excise Tax Repeal Act of 2005, which aims to disconnect a 107 year-old federal excise tax on telecommunications services.

Introduced in 1898 as a temporary luxury tax to defray costs of the Spanish-American War, today in excess of 100 million American households across the nation still pay an excise on their telecommunications services such as land lines, cell phones, and dial-up internet connection. Assessed to not just local service but also premium features like long-distance, toll charges, call waiting, caller ID, directory assistance, and wireless services; this tax continues to burden consumers.

For far too long well over 100 years Americans have been pumped dry by a tax on the telephone while once considered a luxury good is now a necessity. Perhaps this tax was suitable in the late 1800s when we were forced to fund an offensive launched upon us by Europeans. Today, however, it is detrimental to innovation and should be disconnected. As Benjamin Franklin said, But in this world, nothing can be said to be certain, except death and taxes, Rep. Poe said. I commend my colleague from California Representative Gary Miller for introducing this right-thinking legislation.

Initially used to finance the three-month Spanish-American War, the phone tax remained in place until 1916 when it was briefly repealed for a year. Later reinstated to buffer World War I expenditures, the telephone tax was repealed toward the wars end, and then reinstated again at a higher rate of 25% during World War II. Though scheduled to be phased out in 1964, the tax was ultimately retained and made permanent in 1990. The Clinton Administration vetoed a measure in 2000 that would have finally eliminated this tax.

Contrary to the gas tax revenues from which are shuttled into the Highway Trust Fund telephone tax proceeds are deposited in the General Treasury. Currently, the luxury tax is also levied upon airplane tickets, firearms, beer and liquor, and cigarettes.